The manufacturing sector entered its third quarter of growth in July on the back of stronger levels of production, new orders and deliveries.
The seasonally adjusted Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) rose 1.5 points to 54.4 last month – the seventh straight month of growth in manufacturing (readings above 50 indicate an expansion in activity).
The transport equipment, fabricated metals, basic metals and machinery and equipment sub-sectors benefited from stronger demand in the mining and infrastructure sectors in the month.
Encouragingly, consumer-related sectors also bounced back last month, however, the high exchange rate continues to affect manufacturers with exports falling during the same period.
Australian Industry Group Chief Executive, Heather Ridout, said: "The recovery in manufacturing continued in July despite the waning impacts of fiscal stimulus and above-normal business interest rates.
Private sector demand is slowly re-emerging as a source of growth.
While Australia remains the stand-out economy globally, the environment is also patchy and volatile and the world economy faces renewed uncertainty.
"Manufacturers will be looking for policies in a post-election environment that will help secure a full recovery in the sector and foster longer-term national productivity growth. Interest rates and fiscal policy need to be set to support further expansion," Ms Ridout said.